South African Equities – What lies beneath
In this live-recorded webinar STANLIB’s Head of Absolute Returns, Marius Oberholzer, and Senior Portfolio Manager, Warren Buhai, shared their SA equity thesis, while considering the market shifts in 2020 and within the construct of the recent equity market bounce.
- Equity markets have struggled to deliver returns since the Global Financial Crisis, other than in the US. From a global investors’ perspective investing in the SA market, we are back to where we were 15 years ago. Why is the US doing so well? It comes down to six tech stocks.
- SA’s currency performance has a significant impact on equity market performance, similar to other emerging markets. In South Africa, the depreciating rand has supported equity market growth for the last nine years and provided multi-national exposure.
- Commodity performance is another equity market performance driver, which is benefitting the SA resource sector. This may differ for precious metals, which typically perform when investors are looking to protect wealth.
- SA company shares, also referred to as SA Inc, are showing weak earnings growth. South Africa is faced with structural problems as well as fiscal problems which hamper growth. This in turn has an impact on cost of capital which impacts valuations.